Equity markets keep on climbing

Valuations still look attractive as investors see few other options

Associated Press

Published 5:42 pm, Wednesday, May 15, 2013

Photo: Richard Drew

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Traders gather at the post of specialist Ronnie Howard, center, on the floor of the New York Stock Exchange Monday, April 29, 2013. Enthusiasm on Wall Street sparked by another positive report on the U.S. economy helped push most Asian stock markets higher Wednesday May 15, 2013. But lower-than-expected German economic growth disappointed investors elsewhere. (AP Photo/Richard Drew) less

Traders gather at the post of specialist Ronnie Howard, center, on the floor of the New York Stock Exchange Monday, April 29, 2013. Enthusiasm on Wall Street sparked by another positive report on the U.S. ... more

The market got off to a weak start, then turned higher. Investors shrugged off a slowdown in manufacturing last month. More signs of slack in the U.S. economy, the thinking goes, means the Federal Reserve will keep pumping money into financial markets.

Terry Sandven, chief equity strategist at U.S. Bank's wealth management group, said most investors have come to expect choppy economic growth, so they take mildly disappointing reports in stride. With companies reporting rising earnings and few appealing alternatives, he sees no reason to sell stocks.

Google gained 3 percent as the online search company unveiled a music streaming service and upgraded features for Google Maps. Google rose $28.79 to $915.89, a gain of 3 percent. It's up 50 percent over the past year.

News of slowing manufacturing in the U.S. and a widespread slowdown in Europe weighed on financial markets in early trading. The Federal Reserve said that U.S. factories cut back sharply on production in April, as automakers produced fewer cars and most other industries scaled back. But the stock market recovered by midday.

"Yes, we're at all-time highs, but valuations are still attractive," Sandven said. The S&P 500 is trading at 15 times earnings for 2013.

More than four out of every 10 companies in the S&P 500 pay a higher yield in dividends than U.S. government bonds pay in interest, Sandven said.

In other trading, the Nasdaq composite rose 9.01 points to 3,471.62, a gain of 0.2 percent.

Apple's stock took a sudden turn lower after reports said that a hedge fund run by the billionaire David Tepper slashed its holdings in the tech company. Apple lost $15.01 to $425.85, a drop of 3 percent.